SAN DIEGO, Calif. (Legal Newsline) -- The altruism of Donald Trump saved Ed McMahon's home from foreclosure Thursday, but hundreds of thousands of not-so-famous Californians remain desperate for help, an official told Legal Newsline.
The foreclosure crisis in California has become an "emergency," according to San Diego City Attorney Michael Aguirre, who told LNL he would push ahead with plans to seek a preliminary injunction blocking Countrywide Financial Co. from foreclosing on homes until a strategy can be worked out.
McMahon, longtime sidekick to Johnny Carson on "The Tonight Show," was arguably Countrywide's most famous delinquent homeowner.
Reports surfaced earlier this year that the 85-year-old's 7,000-square-foot Beverly Hills home was about to be lost.
On Thursday, high-profile developer Trump said he would purchase McMahon's home and lease it back to him. The star of his own reality television show "The Apprentice," Trump said he doesn't know McMahon personally, but grew up watching him on TV.
"How could this happen?" Trump told the Los Angeles Times, concerning McMahon's troubles.
Which is exactly what Aguirre believes all California leaders should be working together to find out, not just for the high-profile borrowers like McMahon, but the working class families that are being pushed out of neighborhoods all over the state.
San Diego is among the hardest hit during the foreclosure crisis. In the second quarter of 2008, foreclosures increased 31 percent over the previous quarter and 180 percent over the previous year, according to news reports.
Countrywide is the target of an ever increasing amount of lawsuits filed by state attorneys general. California Attorney General Jerry Brown first filed suit against the company for misconduct in its lending practices, which Brown alleges include incentives to lending officers for pushing clients into risky loans with escalating interest rates that were likely to default.
Attorneys general in Florida, Illinois, Washington and as of this week, West Virginia, have followed with similar suits.
Last month, Aguirre jumped into the fray with his own lawsuit on behalf of San Diego residents against Countrywide.
At the time, he called upon officials at Bank of America, the banking institution that recently purchased Countrywide, to issue a voluntary moratorium on foreclosures that would allow time to set up a plan to do everything possible so homeowners could save their homes.
Then in early August, two California-based advocacy groups sent a letter to Brown asking him to seek a preliminary injunction against Bank of America that would force a moratorium much like the one Aguirre requested voluntarily. After no response from Brown, they sought help from Aguirre.
Aguirre said he is in the process of preparing the preliminary injunction and plans to proceed. But he also raised concern that Brown seemed more intent on his own negotiations rather than trying to work cooperatively.
"The difficulty I see," Aguirre told LNL, "is that it is not being treated as an emergency problem by the attorney general or Bank of America."
Aguirre said he has tried to contact Brown, but that the attorney general doesn't return his calls.
He confirmed that Brown was in talks with Bank of America, but is keeping those talks private.
Robert Gnaizda, general counsel for the Greenlining Institute, which was one of the two advocacy groups that contacted Brown, also told Legal Newsline on Tuesday that Brown was in "secret talks" with Bank of America.
The Attorney General's office did not return calls seeking comment for this story.
Aguirre said the lack of communication could hurt homeowners.
"It would be best if we all worked together," Aguirre said.
The city attorney said he hoped that Brown's negotiations will include foreclosure relief, not just financial terms.
"Our concern right now," Aguirre said, "is the idea of trying to save as many homes from foreclosure as possible."
Gnaizda, of the Greenlining Institute, said he believes the foreclosure crisis in California could result in 725,000 to 900,000 foreclosures by the end of 2010 unless an injunction is obtained.
Minorities and working-class families have been hit disproportionately harder by the crisis because "they were the target of the most unscrupulous sub-prime lending practices," he said.
Aguirre agreed, but said the problem has since spread.
"That's where the fire starts, but the fire spreads and has spread to the highest valued houses," he said. "In this way it effects everybody and we have to work together to put the fire out."
And so far, Aguirre said he is not impressed with the collective firefighting efforts. He said Bank of America seems intent on letting the market correct itself.
"We're back to the Herbert Hoover approach of trying to solve the problem," he said, referring to the Depression-era president of the 1930s. "Doing nothing is the worse thing they can do."
Foreclosures most often lead to abandoned properties, which lower property values and bring blight to neighborhoods, Aguirre said.